# 131 cheat sheet.docx - Real Cash Flow = Nominal(1...

• 1

This preview shows page 1 out of 1 page.

Real Cash Flow = Nominal/(1 + inflation)^t | (1 + real interest)(1 + inflation) = 1 + r Perpetuity: PV = C/(r – g) | Annuity: PV = [C/(r – g)][1 – (1 + g) t /(1 + r) t ] Revenue – Operating Expenses = EBITDA, - D&A = EBIT, - interest = earnings before taxes FCFF = EBIT(1-t) – cap ex – change in working capital + D&A FCFE = NI + D&A – Preferred – Cap Ex – change in working cap – principal repayments + cash from new debt P 0 = Div 1 /(r – g); g = plowback * ROE; plowback = RE/NI = 1 – Div/EPS; ROE = EPS/BVPS Bonds Face Value: Fixed return at maturity, coupon rate: % of face value, yield at offering: coupon rate/price at offering P 0 B = C/(1 + 0 r 1 ) + C/(1 + 0 r 2 ) 2 + … + (C + F)/(1 + 0 r t ) t = C/(1 + 0 r 1 ) + C/[(1 + 0 r 1 )*(1 + 1 r 2 )] + … | Forward Rate: (t-1) r (t) , Spot Rate: 0 r t YTM = - I 0 + C/(1 + YTM) + C/(1 + YTM) 2 + … (C + F)/(1 + YTM) t | YTM = coupon rate if par, YTM > coupon if above par Macaulay Duration: Find PV of individual cash flows using YTM -> Divide by total PV -> Multiply by t -> Add to find duration To find modified duration (% change in price for 1% change in YTM), divide Annual Macaulay duration by (1 + y), y = yield for period (semiannual, etc.) and add a negative | Discount Factor = 1/(1 + YTM)t